SINGAPORE (Apr 29): Singapore’s seasonally-adjusted unemployment rate rose a smidgen 0.1 percentage points in 1Q20 ended March, continuing the softer labour market conditions of 2019.
The city-state’s unemployment rate rose to 2.4% in 1Q20, ahead of the 2.3% recorded in the preceding quarter ended December 2019. This was revealed in the preliminary numbers released by the Ministry of Manpower (MOM) in its Labour Market Report, on Thursday.
Unemployment among both residents and citizens was up, with that for residents hitting 3.3% in 1Q20, from 3.2% in 4Q19. Meanwhile, the rate for Singaporeans rose to 3.5%, from 3.3% in the preceding quarter.
At this level, the unemployment rate remains lower than the 4.8% recorded in 3Q2003 post the SARS pandemic, as well as the 3.3% seen in 3Q2009 during the height of the Global Financial Crisis (GFC).
In line with this, total employment contracted sharply by 19,900, amid a reduction in foreign employment. This marks the republic’s largest quarterly contraction since the SARS pandemic which saw hiring plummet by 24,000 in 2Q2003.
Specifically, the decline was heralded by the services sector as the consumer facing industries of food & beverage services and retail trade as well as hospitality saw a significant reduction in consumption following the Covid-19 outbreak.
Meanwhile, the manufacturing and construction sectors also saw reduced hiring amid stalled operations in 1Q20.
However, bright spots were seen in the healthcare, public administration and professional services sectors which have seen heightened demand since the outbreak of the pandemic.
Still, MOM cautions that those who remain employed may have experienced a reduction in their working hours or an adjustment to their salary.
Aside from employment, retrenchments for the quarter hit 3,000 – higher than the 2,670 shed in 4Q19. Of this, a majority comes from the services sector as industries such as retail trade and food & beverage were affected by a fall in consumption after the imposition of the safe distancing measures from mid-February. Similarly, the tourism-dependent sectors also say more layoffs from the fall in visitor arrivals.
Looking at the numbers, MOM points out that they remain significantly lower than the quarterly peak of 12,760 in 1Q2009 during the height of the GFC.
This is as much of the first quarter's came in the second half, after Chinese New Year when restrictions were palced on travel, noted Manpower Minister Josephine Teo.
The economy subsequently saw sharp contractions particularly in the hospitality and tourism sectors, she adds.
But, Teo muses that these figures have yet to include movements that occured after the circuit breaker which kick off in April.
Since mid-March some 3,000 companies with about 100,000 employees or 3% of the workforce notified MOM that they were taking cost-cutting measures such as salary cuts.
Private-sector economists caution that unemployment numbers are likely to inch up in the current quarter and for the rest of the year.
For instance, DBS Bank’s senior economist Irvin Seah expects the overall unemployment level to rise to 3.6%. He is also looking at retrenchments hitting some 45,600 this year – nearly double his initial estimation of 24,500 a month ago. Of this, he says nearly 60% will likely be foreigners.
Meanwhile, Maybank Kim Eng senior economist posted a gloomier projection. Drawing reference to the unemployment levels of 3.3% during the peak of the 1998 Asian Financial Crisis (AFC) and GFC, Chua cautions that Singapore’s resident unemployment rate will climb to around 5%.
Job losses, he added, could spike as high 200,000 this year – “far greater than even the magnitudes seen during the AFC or GFC”.
For now, the MOM expects the wage support measures announced under the three Budgets this year will cushion the extent of job losses.
“With job and wage support measures announced in [the three] Budgets [this year], companies are encouraged to retain workers and retrench only as a last resort, [so] layoffs did not see a sharp increase in 1Q20,” the MOM reports.
One such approach is the Jobs Support Scheme (JSS) which sees the government making a co-payment of up to $3,450 or 75% for each Singaporean’s gross monthly wages for April and May.
The JSS will continue with a 25% subsidy for all firms till the end of the year, while those hit hard by the pandemic such as the tourism sector will continue to have a 75% subsidy till December.
Aside from this, the government has also launched the SG United Jobs initiative which seeks to create some 10,000 jobs over the next year. These include roles across sectors such as public service, healthcare, early childhood care and education and social services.
